Budapest Office MarketView H1 2017

New supply reached only 5,500 sq m in H1 2017, down by 82% y-o-y. This new addition to the stock was entirely pre-let. Total completions are set to amount to 91,000 sq m by year end. The expected new supply volume in 2017 represents a slight slowdown from last year, but in 2018 we foresee a sharp upswing on the back of the ongoing development wave.

Take-up in H1 2017 reached 115,500 sq m; largely in line with the corresponding period last year but below the long term average. Net absorption in H1 2017 totaled 26,900 sq m – declining 55% y-o-y, but still well above the level of new supply.

The vacancy rate continued its decline, standing at 8.6% by the end of Q2 2017, down by 0.6 pp q-o-q and 1.8 pps y-o-y. This is the lowest level on record and we expect further decline until the end of 2017, on the back of limited supply and a high pre-lease ratio.

The average asking rent in Q2 2017 stood at EUR 11.3, which was 3% above the level measured during the same period of the previous year.